[unreadable] Patients with co-occurring type 2 diabetes and depression (DM/D) represent a large and especially vulnerable population that may not benefit from recent advances in knowledge regarding the importance of diabetes self-care and physical activity enhancement. The purpose of this multi-site randomized effectiveness trial is to evaluate the impact of a stepped care management intervention, delivered via telephone in order to increase access for a diverse population of DM/D patients. The intervention is based on extensive epidemiologic evidence regarding the importance of depression management for diabetes patients, as well as studies demonstrating: (a) the impact of depression management on diabetes treatment outcomes; (b) the efficacy of telephone care for diabetic patients and depressed patients, and (c) the impact of physical activity promotion on multiple outcomes among diabetic and depressed patients. Specifically, the intervention integrates components of efficacious treatments into a manualized care management model that can be delivered to large numbers of DM/D patients and disseminated consistently across health care systems. DM/D patients will be randomized to either: (1) enhanced usual care consisting of brief education regarding depression, diabetes self-care, and physical activity promotion; or (2) telephone-based, stepped care management that includes medication care management (MCM) and/or cognitive behavioral therapy (CBT). The MCM module will use a widely accepted algorithm to identify effective antidepressant agents, determine appropriate doses, and promote adherence. The CBT module is based on interventions with proven efficacy and focuses on the treatment of depressive symptoms, the promotion of physical activity (specifically walking), and increasing patients' effectiveness in communicating with their providers. In order to maximize generalizability, participants will be drawn from two sites, each consisting of a university-based health care system and its affiliated VA health care system. The intensive intervention phase will consist of frequent contacts by a nurse practitioner serving as a care manager and using manualized MCM and CBT protocols. The maintenance phase will consist of monthly telephone follow-up to monitor patients' progress, reinforce educational messages, and provide encouragement for continued treatment adherence. Outcomes will be measured at four- and 12-months. Primary endpoints will be Hb ALC levels and a cardiovascular risk index. Secondary endpoints include proximal intervention targets (e.g., depressive symptoms, physical activity levels, and provider-patient [unreadable] [unreadable]